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Commercial

COVID Related Class Actions—How to Prepare

As the coming tide of COVID-related class action suits looms, many countries are adapting and growing the legal processes by which these cases are governed. The US and Canada have seen filings for class actions skyrocket, with Australia, Germany, the UK and China all expected to follow suit. And where there are class actions, there are litigation funders. ICLG details that industries hardest hit by class actions include retailers, tech companies, event and ticketing companies, manufacturers, and financial institutions. In Canada, negligence-related cases involving nursing homes and transportation providers, and insurance cases are most prominent. Australia is overwhelmed with class actions and has enacted new laws to stem the tide of litigation funders helping citizens who have been wronged by governments or big business. Specific types of class action litigation are expected to intensify in size and number. Consumer cases regarding overpricing, scheduled subscription payments, and breach of contract will no doubt be common. As will commercial litigation over force majeure, warranties, and indemnification. Securities litigation will likely also rise, as well as insurance claim denial cases. Employment liability with be another huge litigation type as safety and privacy issues come to light. Preparedness and discrimination suits are expected to rise, as will whistleblower and retaliation claims. Privacy litigation may also grow as more and more people are working remotely or taking online classes. Data breaches and cyber insecurity are already fueling class action filings. Those looking to minimizing risks would do well to perform a risk analysis that includes reviewing agreements and public disclosures. Communicate with employees, vendors, and shareholders if applicable. Plan and implement safety procedures at every level, including increasing options to work from home. Some recommend that you stave off lawsuits by implementing a class action waiver. Your legal team can advise on this. Taking precautions now can save millions in time and legal fees down the road.
The LFJ Podcast
Hosted By Dan Bush |
Our guest today is Dan Bush, Chief Investment Officer and Director of Innovation at Law Finance Group. Dan discusses Law Finance Group's latest law firm funding product, AR Now, including why his firm is targeting accounts receivable, what the selection and approval process for lawyers is like, how AR Now can help facilitate alternative fee arrangements, and how the product fits into the company's suite of offerings. [podcast_episode episode="6804" content="title,player,details"]
Commercial

2020 Canadian Readers’ Choice Awards: Litigation Funders

Who do Canadians think is tops in their respective legal fields? The 2020 Canadian Readers’ Choice Awards answer that very question. The list of suppliers, vendors, and legal-adjacent businesses was voted on by nearly two-thousand readers who revealed their favorites in 38 separate categories. Canadian Lawyer reveals the top three litigation funding organizations used by Canadian legal professionals. They include BridgePoint Financial and Nudorra Capital Inc—both located in Toronto, and Omni Bridgeway in Montreal. BridgePoint Financial has been in the litigation finance market since the early 2000s. It boasts a strong commitment to client needs and has been involved in precedent-setting cases. BridgePoint is involved in education initiatives and prides itself on offering value-added funding solutions. These include funding for law firms, settlement and inheritance loans, and class action cases. Nudorra Capital offers litigation loans that are fast, easy, and offer competitive rates and an application process that doesn’t require a law degree to understand. Nudorra offers legal loans for insurance claims, personal injury claims, family law divorce cases, and several types of insurance claims. It has offices all over Canada. Omni Bridgeway is a world-renowned leader in litigation finance, covering an array of legal specialties. Dispute resolution finance is Omni Bridgeway’s claim to fame. It has proven expertise in enforcement and recovery, common law, and civil matters. One of the longest-running litigation funding entities, Omni Bridgeway has been around since the 80s, which means this is the second global financial crisis it has navigated.
Commercial

Directors Accused Under Insolvency Act Lose Dismissal Attempt

Two former directors of a now-dissolved company lost an attempt at the dismissal of their case. The directors had sought for the cases against them to dismissed, on the grounds that a litigation funder should not benefit financially from the claim.   Pinsent Masons explains that the court looked at the actual wording as well as the presumed intention of the agreement between the litigation funders who bought an interest in the recovery, and the liquidator who sold the rights. The court has affirmed that litigation funders who buy claims against directors or insolvent companies have the right to benefit financially. This decision comes after an earlier one that the statutory rights of an action conferred to an officeholder—such as a liquidator—could not be assigned. This 2015 law was implemented at a time when directors of insolvent companies rarely saw cases taken to fruition because of the time and expense needed to do so. Litigation funding has changed that landscape significantly. The directors in this action asserted that their case should be dismissed or stayed owing to the fact that the company is no longer in existence—saying if funds could not go back into the company and then to creditors, the claims should not move forward. Courts were unimpressed, saying that the wording of the law in question negates the argument that the actions can be included. They also noted that the company does not have to be directly involved in order for money to move to creditors or those who bought a stake in the payout. This was largely an expected decision by the High Court. But it’s one that is sure to please creditors and litigation funders alike. It’s also a wake-up call to unscrupulous directors, reminding them that a lack of company funds will not protect them from legal action.
Commercial

Southern Response Appeal Dismissed by NZ Supreme Court

Opt-in or opt-out, that’s the issue at the center of an appeal in the case of Southern Response v. Ross. In New Zealand, where the case was heard, opt-in class actions are the norm. The case, supported by third-party legal funding, began with an allegation that Southern Response did not provide complete and accurate information about repairing earthquake damage to homes. LawFuel reports that Rule 4.24 of the High Court Rules 2016 allows representative proceedings without specifying whether they be opt-in or opt-out. The courts could have ordered one or the other. Southern Response asserted that opt-in was customary, and changing this should require comprehensive legislative oversight. The Court of Appeal ruled that the original claim should be pursued on an opt-out basis. The case then moved forward to the Supreme Court for another appeal. Southern Response also claimed that because opt-out is not the norm, it’s impossible to demonstrate the effectiveness of that approach—ostensibly to protect the interests of participating class members. Essentially, they’re saying that because it isn’t typical, there’s no way to say if it will work. This defeatist theory left the Supreme Court unmoved. The court also determined it unnecessary to hold off on the case until comprehensive legislation can be passed. The court stated that sufficient laws exist to clarify any sticking points. The court also rejected claims that potential plaintiffs who remained unaware of the case could be subjected to rules to which they did not agree—such as a litigation funding agreement. Finally, the court was unmoved by the suggestions that they did not have the power to approve settlements in representative proceedings. Ultimately, the Supreme Court determined that the lower court decision was apt—an opt-out order is more effective for this case. It’s also the procedure requested by the plaintiffs—which New Zealand courts try to accommodate whenever possible.
Commercial

Guidelines for Emerging Contingency Practices

Trends in the legal or business world often begin as adaptations to some outside event or circumstance. The early stages of COVID brought about a trend of firms moving away from billable hours and toward contingency fees. Another growing trend is the use of Litigation Finance to manage balance sheets and continue to pursue viable litigation without tying up liquid assets. When law firms opt to ignore trends, they can miss out on advantageous developments.

Burford Capital explains that developing a contingency practice can be a forward-thinking move that anticipates coming economic realities. If you’re considering starting a contingency practice, consider the following:

--An internal buy-in combined with early goal setting will motivate and inspire the team. Consider tolerance to risk, a loose timeline, and a clear vision of what you want to achieve.

--Communication and Education. Investor confidence is vital to any new business venture. Also, consider an outreach team who can find plaintiff-side contingency work. Shareholders may be reticent to build a contingency practice. Educating them on the benefits as well as potential ethical concerns is essential.

--Underwriting. Infrastructure to vet cases and develop contracts is an irrefutable part of establishing a contingency practice. A team that can assess risk and estimate time frames and potential awards is indispensable. Legal finance professionals are ideal for this.

--Partners. Contingency practices can wreak havoc on expected partner payouts if there’s no plan in place. Good communication can help assure partners that they’ll still be compensated fairly.

--Risk Sharing. Partnering with a legal finance entity is a bold step that can reap major benefits. Their expertise and ability to scale up a practice is a vital part of getting a new practice up and running. A trusted partner in risk-sharing can mean the difference between an adequately functioning practice and a booming one that’s ready for anything.

Commercial

Adapting to COVID D&O Risk

It cannot be denied that insurance for directors and officers is skyrocketing, whether it’s for private or public companies or even non-profits. The market is expected to remain hardened, as pressure to raise rates grows exponentially. COVID and its impact are only adding to the problem. What can be done? Insurance Business Mag suggests that a rise in securities class actions as well as reliance on litigation funding has led to insurers offering less coverage, while making underwriting guidelines more stringent. The effects of COVID reach around the globe, necessitating greater disclosures from companies who now may need to detail how their business will deal effectively with the pandemic. Prolonged work stoppages and shutdowns have created widespread financial stress. As expected, service-based and entertainment-related businesses have been hit hardest. Even following CDC best practices guidelines may not be enough to reopen safely. Adding lines of credit or utilizing legal funding has worked for many companies, while others continue to struggle. Ultimately, communication is a key aspect of survival in a COVID landscape. Frank and open discussions with employees, shareholders, suppliers, and customers can go a long way toward putting people at ease and finding solutions before financial woes become insurmountable.
Announcements Commercial

Therium adds to London Investment team with the hire of Ben Smyth

Global litigation funder, Therium Capital Management, announced today that Ben Smyth has joined the firm’s investment team as an Investment Officer. Ben joins Therium following a decade at UBS Investment Bank, where he was most recently Head of Benelux and Nordics within the bank’s Financial Institutions Debt Capital Markets (DCM) advisory group.  In this role, Ben advised some of the largest Banks and Insurance companies in Northern Europe, on optimisation of their liability profile. Prior to UBS, Ben was an Associate Director at ABN AMRO Bank N.V, where he was responsible for DCM across Benelux, UK and Ireland. His career to date has seen Ben originate, structure, and execute multiple credit transactions globally, spanning Europe, North America and Asia Pacific. Ben was awarded a distinction, Graduate Diploma in Law from BPP University and graduated with a first class (BA Hons) degree in Economics from Durham University. Neil Purslow, Co-Founder and Chief Investment Officer of Therium, said: “We are delighted that Ben is joining our high calibre investment team. Ben’s investment banking experience and strong financial knowledge will complement our highly experienced investment team who each handle all aspects of the funding process.” Ben Smyth said: “I am very excited about joining Therium’s top quality investment team.  My role will encompass origination, negotiation, due diligence and case management – which is unique amongst the leading global litigation funders. This approach accounts for Therium’s high standing in the market and the low rate of turnover of staff in its investment team, and it will allow me to build enduring relationships with clients. I look forward to helping Therium build on the firm’s impressive track record and strong reputation, with the support of a fantastic leadership team whose focus on top quality execution is relentless.” About Therium Capital Management: Therium is a leading provider of investment capital to the legal industry and one of the largest, having raised over $1 bn since 2009.  With investment teams in the UK, USA, Australia, Germany and Norway, Therium has funded litigation and arbitration claims exceeding $40 billion including many of the largest and most high profile funded cases in the UK and internationally, including arbitrations under rules of the LCIA, ICC, UNCITRAL, LMAA, AAA, CIETAC, ICSID, Stockholm Chamber of Commerce and the Energy Charter Treaty.  Therium has been Top Ranked by Chambers and Partners and Leaders League with investment officers across the UK, Europe, USA and Asia Pac recognised as leading individuals in litigation finance. Last year to mark the firm’s tenth anniversary, Therium Access was launched as a not-for-profit venture to fund a wide range of access to justice projects and cases – supporting the most vulnerable in our society and helping to bridge the widening justice gap. With its own board composed of eminent figures from the legal community and a dedicated grants officer, Therium Access has made over £1.3 m in financial commitments over the last 18 months to over 26 different organisations. As the first initiative of its kind, Therium has been shortlisted for several awards for launching this ground-breaking initiative, including the FT Innovative Lawyer Awards 2019 and the Lexis Nexis Awards 2020. Therium also invests in AI and software projects to accelerate the advancement of the industry. As a founding member of both the ALF, ILFA and the Litigation Funding Working Group, Therium is also committed to shaping the future of legal finance and setting high standards for the industry.
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Commercial

LCM’s Litigation Funding Agreement Upheld by Court of Appeal

The Court of Appeals recently upheld last year’s Supreme Court ruling regarding a litigation funding agreement in a case against the Gladstone Ports Corporation. That case is being funded by Litigation Capital Management. The SCQ ruling rebuffed allegations that litigation funding agreements may be unenforceable due to champerty restrictions, or because such agreements are contrary to existing public policy. Yesterday's appeals court ruling ensures that the judge’s order stands. LCM finance explains that the Supreme Court of Queensland held in their interlocutory decision that litigation funding agreements are not unenforceable. Champerty, a 13th-century law, forbids non-lawyers from purchasing an interest in a legal case. Modern third-party legal funding does not permit funders to hold sway over decisions in the cases they fund. LCM’s argument included the assertion that champerty is obsolete as a concept of law, and that the court should make that clear in its ruling. Much of Australia has already abolished champerty laws, but Queensland has yet to make it official. The plaintiff’s legal team advanced the idea that even if champerty was still the law, these laws don’t necessarily apply to whether or not a specific funding contract is enforceable. Modern courts, after all, can use their powers to prevent abuse of the legal process or to refuse to enforce any contract that goes against public policy. In order to reach his original decision, Justice Crow’s research led him to the underlying question: What specific malfeasance is meant to be avoided by disallowing the funding agreement? GCP asserted that the funding agreement gave funders LCM an improper amount of control over the case. Justice Crow did not agree. Ultimately, Justice Crow determined that funding agreements were not prejudicial, did not impede justice, and did not involve attempts at unlawful conduct. The upholding of this ruling is excellent news for litigation funders everywhere.